Mumbai, August 5, 2025 – In a landmark regulatory action, the Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹5 crore penalty on leading insurance aggregator Policybazaar. This action stems from several violations identified during a routine inspection carried out in 2020. The violations include conflict of interest, unauthorized product promotion, irregular outsourcing payments, failure to map telemarketing activities to verified agents, and delays in remitting premium collections.

The IRDAI stated that the company permitted its principal officer and other key managerial personnel to hold directorship positions in external firms without seeking prior regulatory approval. This action, according to IRDAI, represented a serious conflict of interest. The regulator imposed a ₹1 crore fine solely for this infraction.

Additionally, another ₹1 crore fine was levied for promoting select insurance policies on Policybazaar’s website as the “top” or “best” without proper validation. This was done using third-party data that had not been independently verified by the regulator. The IRDAI stressed that such practices could mislead customers and distort market competition.

The remaining ₹3 crore penalty was spread across multiple smaller violations, such as irregular outsourcing payments, improper telemarketing sales mapping, and delays in premium remittance to insurers. The IRDAI noted that such operational lapses not only breach regulatory norms but also harm consumer interests.

This marks one of the highest penalties imposed by the IRDAI in recent years, underlining its intent to enforce stricter compliance and transparency in India’s insurance aggregator ecosystem. A senior IRDAI official stated that the regulator remains committed to safeguarding policyholder interests by ensuring that digital intermediaries adhere to all applicable rules.

Policybazaar, operated by PB Fintech, has yet to issue a formal response. However, sources within the company suggested that it may consider filing an appeal or request a review of the penalty order. The incident also draws attention to the growing scrutiny on digital insurance platforms that manage vast consumer data and financial transactions.

With the IRDAI tightening its surveillance mechanisms, this development is expected to serve as a precedent for other digital players operating in the sector. Industry experts believe the ruling underscores the importance of governance, compliance, and ethical marketing in India’s booming insurtech landscape.

Source